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News Conference

News News/Business. (2013) New.

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U.s. 9, Cyprus 8, United States 4, Us 3, Iran 2, Tom Coburn 1, Donald Judd 1, Accommodation 1, Jeremy Dodge 1, Ben Bernanke 1, Jackson 1, Bethe 1, Angelica 1, Angelica Forburen 1, Macro Prudential 1, Buren 1, Martin Van 1, Don Lee 1, Syria 1, North Korea 1,
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  CSPAN    News Conference    News   
   News/Business.  (2013) New.  

    March 24, 2013
    11:25 - 12:24pm EDT  

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jackson takes office. his niece becomes the white house hostess but is later dismissed after fallout from a scandal. during the next administration angelica fanned iran -- angelica forburen is the first lady buren,her, martin van a widower. next come the federal reserve chairman ben bernanke talks to reporters at a press conference about interest rates, the federal reserve quantitative easing program, and the u.s. economy. from the federal reserve board here in washington this is just under an hour.
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>> the federal open market committee committed a two day meeting earlier today. as always my colleagues and i reviewed recent economic and financial developments and discuss the economic outlook. economic outlook. the data had been generally consistent with our expectation that the fourth quarter recovery would prove temporary and modern economic growth would resume. spending by households and businesses have continued to expand. sector has seen for gains. the jobs market has shown signs of improvement over the next six months. private payrolls are growing more quickly,hours of work have increased. the rate of findings and employment insurance has fallen. the unemployment rate has continued to dip down. at 7.7%, the rate remains elevated. thatmains a concern economic growth and job creation
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may be slow in coming months. theontinue to monitor recent increases in japanese prices. prices which seem to be due to factory shutdowns. apart from temporary variations, inflation is running some of the long run objectives of 2%. expectations remain stable. overall, still high in combination with relatively low inflation space underscores the need for policies that support progress for natural employment. in conjunction with this meeting, the seven board members submitted individual economic projections. as always, each suggestion is conditioned on each individual's view of appropriate monetary policy. the projections for economic
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growth have a central tendency of 2.3% for 2013, rising to 2.9% in 2015. thecentral tendency for unemployment rate for the fourth quarter this year is 7.3%. declining to 6.5% in the final quarter of 2015. most participants see inflation gradually increasing. forcentral tennessee projections of inflation is 1.3% this year and 1.7% in 2015. as you already know from the policy statement, we are continuing the purchasing program first announced in september. this was supported by our review in the meeting of the costs of additional purchases. let me briefly summarize the cost-benefit analysis.
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although estimates of the efficacy of the asset purchases are uncertain, most participants agree to continue to provide meaningful support to job creation. most also agree this will likely not to be able on its own to fully offset major economic headwinds such as those that might arise from significant fiscal restraint. we also had a discussion of possible risks of continued expansion of the balance sheet. the risks include possible adverse implications of the functioning of securities markets and the potential effects on the various scenarios through a larger balance sheet on the earnings and asset holdings and on its significance to the treasury. we also can considered possible
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risk to financial stability, such that might arise with low rates and it leads some participants to take on excessive risk. in the committee's view, these costs are manageable but will continue to be monitored and we will take them into a corporate account as we determine the size, bass, and composition of our asset purchases. the policy decision had two main elements. the committee decided to continue purchasing additional securities at a pace of $40 trillion a month and a longer- term treasury securities at $45 billion per month. hasmphasizes the committee described this program in terms of a monthly purchase rather than a total amount of expected purchases, and had supplied the evolution of the problem to this achievement of improvement in
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the context of -- stability. within this framework, progress is made toward these economic objectives. at this meeting, the committee judged that none was warranted. the target for the federal funds rate was kept as 0.1%. it will remain a program for a considerable time after it ends and as the economic recovery strengthens. we anticipate the low range for the funds rate will be appropriate at least as long as the unemployment rate remains at 6.5%. inflation is projected to be no more than half a percentage point above 2% and longer-term inflation expectations continue to be well hampered.
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economic conditions provided are thresholds, not triggers. crossing one or more of these thresholds will not lead automatically to an increase in rates. assessmittee will whether the outlook justifies raising the target for the federal fund rate. the guidance will help markets assessed how they are likely to respond to economic developments. the purpose is to insure households that monetary policy will continue to support recovery even as the pace of economic growth and job creation takes up. in their individual projections, 14 participants saw the first increase of the target in federal funds rate as occurring in 2016 or 2015. howme comment briefly on the two main increases the policy, asset purchases, and federal funds rate, fit together.
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the purpose of the asset purposes is to increase the economy's near-term momentum. with the goal of helping to promote a self sustaining recovery of stability. information is provided about when the committee will consider the removal of policy through increases of the target through the federal funds rate. importantly, the committee expects a considerable pass between the time the committee will cease adding accommodations through asset purchases and moving the federal funds rate target to more normal levels. the committee will take a balanced approach. the committee anticipates moderate economic growth supported by business spending. the unemployment rate remains
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elevated. remainon is expected to low and fiscal policy has become more restrictive. in light of the outlook and following a review of the efficacy and cost of additional asset purchases, the committee reaffirmed its federal funds guidance. thank you. i would be glad to take questions. >> hello. my question is around to eat. qe.round we have seen colleagues give what they are looking for before they would consider accepting from qe. can you tell us what you are looking for specifically and notfact that there are threshold's associated with qe, does that say anything about the agreement of committee members?
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questione your second first, the lack of threshold's comes from the complexity of the problem. withve people assisted improvements in the economy. they are also costs associated with unconventional policy, such as potential effects of financial stability, which are hard to quantify and people have different views about. we have not been able to give quantitative thresholds at this point for the asset purchases. providecontinue to information as we go forward. in particular, as i mentioned it today, as we make progress, we may adjust the flow rate of purchases month-to-month to appropriately calibrate the amount of accommodation we are providing given the outlook.
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in terms of further color, we have not given quantitative analysis. we would be looking for a sustained improvement in a range of key labor market including payrolls, but also others like the hiring rate, claims for unemployment insurance, and so on. we are looking for a sustained improvement across a range of indicators and since we are looking at the outlook and the prospects rather than the current state of the labor market, we are also looking at things like groped to understand whether there is sufficient demand to provide it.
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>> to follow up on that last point, you referred to the possibility of the rate of purchases per month. what is the difference in the conditions that would have you do that as opposed to the substantial improvements in the labor market to stop the program altogether? thank you. >> the problem with having a single criterion is it is all or nothing. we maintain full speed ahead until we hit a certain target and then we stop. that would be very difficult for the markets to understand and anticipate. we think it makes more sense to have our policy variables respond in a more continuous way to changes in the outlook. as we make progress toward our objective, we may adjust the rate of flow purchases
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accordingly. we will not do that every meeting. but when we see the situation has changed in a meaningful way, we will adjust the range of purposes to keep the level of accommodation consistent with the outlook and to help provide the markets with a sense of how much progress is being made so they can make better judgments. >> [indiscernible] >> as i just described what i mean by substantial improvement, it is a broad based improvement and a range of indicators, as well as improvement in output of labor demand. we see partial and modest improvement. we see a time in which labor markets are doing stronger, then we might improve accommodation at that point. if the labor market were to
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weaken or the outlook would get worse, we can bring accommodation back to the previous level. >> i have to come back to the issue of adjusting the flow rate. are we near that time right now? how can the market calibrate the number two changes? let's say we had 236,000 jobs per month and the unemployment rate is 0.2%. would that be sufficient to begin to adjust the purchases down word? thank you. >> that will be a decision the committee have to make. we will look at progress that has been made since the last meeting and try to assess the outlook and try to determine whether there has been a change. we will use models internally and other indicators of the state of the labor market to try to make a good estimate of
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much we need to change the rate of flow. again. the point of this is that the markets see our behavior and them see how we respond to changes in the outlook and that way there will be a better ability for the markets to anticipate either a return of higher levels of purchases. >> are we at a level now? >> there has been improvement. we have seen improvement in the last five months. we have seen over 200,000 jobs per month in the private sector. unemployment's rates have come down. unemployment insurance claims are the lowest level they have been since the crisis. we are seeing improvement. one thing we need is to ensure this is not a temporary
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improvement. we have seen times before where we had 300,000 jobs for a couple of months and things weakened again. an important criteria would not just be the improvement we have seen, but will this be sustained for a number of months? >> i wanted to ask you about cypress a little bit. your move a reference in a financial conditions, suggesting you are aware of these conditions. does the fact that a country as small as cyprus can set off a global reverberations' suggest the financial system is a lot more fragile than the stress test suggests? you discounted the estimate of the too big to fail subsidies thrown at you during the senate hearing a couple of weeks ago. does the fed have its own estimate of what that is?
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>> it is a difficult situation in cyprus. you have got a situation where the banking system is a large multiple of the size of the county. in the financial sense, it is bigger. it is a difficult problem because the country faces both fiscal and bank capitalization issues. you have seen the political stress in terms of trying to figure out how they will meet the demands of the euro group for contributing to their rescue. in light of difficulties and questions about the way cypress is treated and what implications might be had, it does have some consequence. having said that, the vote failed and the markets are up today. i do not think the impact has been enormous. it is something we are paying attention to.
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we hope europeans will come up with an efficient solution. we are monitoring very carefully. we are not seem major risk to the u.s. financial system or the u.s. economy. on the benefits of being too an to fail, we do not have estimate. it is pretty difficult to control all the factors coming into determining the size of the subsidy. there is evidence financial markets are taking into account the possibility that large financial institutions will fail. you see financial spread in credit defaults swaps. you see discrimination among different institutions according to the bond market. there is evidence of market discrimination.
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that being said, i never meant to say to the senator, and i share her concern that it is a major issue, i never meant to imply the problem is solved and gone. it is not. it is still here. there is a lot of work. we are putting in the standards, the authorities from dodd-frank, we are working with international partners. i hope we will make progress because i agree with her 100% that it is a real problem that needs to be addressed, if at all possible. >> i would like to change the subject a little. your predecessor served as the fed chairman for 19 years. by contrast, the bank of england has a eight-year term limits for their top people.
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i want to ask you two questions related to that. do you think eight years is the right amount of time for a central bank leader to serve, or should it be less or more not defined. more specifically, as regards to you, your term is 10 years completion, how do you think about what you will be doing next year after your term has been completed? >> on the latter question, i do not have anything for you. walll be informing "the street journal" and other publications if i come to a decision or developments in that front. doterms of term limits, i not have a strong view on that. different countries use different approaches. the president always has the option to reappoint or not reappoint the fed chairman. the senate always has the option of confirming or not confirming.
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in that respect, term limits are redundant. if you have limits on the fed chairman, that would be the only office that would have that description. i do not view this as a major issue. nor have i seen this actively discussed. perhaps i missed it. i do not have a strong view on that. my remaining term as a governor, that is not relevant to the question you asked about. >> i want to go back to asset purchases. you have spoken a lot about power of clear communication. i understand it is complicated. why would you leave on the table the additional power for the markets to say we are going
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to do this for a while. second, the risks associated with quantitative easing. when was last time you spoke with someone who is unemployed? >> pretty recently. i have a relative who is unemployed. i come from a small town in south carolina that has taken a big hit from the recession. the last time i was there, the unemployment rate was 16%. i think it is better now. the home i was raised and had just been foreclosed upon when i was visiting. theve great concern about unemployed, both for their own sake but also because the loss of skills is bad for our entire economy. it reduces tax revenues, productivity, so it is very
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important week act to address unemployment. i think most people would agree the federal reserve has been fairly active in that regard. in terms of costs, there are a number of different costs. i mention them in my remarks. one that has been recently discussed, the governor brought it up in a speech, the issue of financial stability. financial instability, if it were allowed to be sufficiently serious, would be a threat to jobs and production. given the experience of the past few years, we want to be sure we are not encouraging excessive risk-taking or other problems in the financial markets. we do address that through a number of means, including monitoring the financial system, communication and the like, but this is something colleagues are worried about.
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>> why not use it as a tool to increase the power? ableain, we have not been to come to an agreement about what guidance we should give an part of the concern is that we go forward and we will have to factor in the efficacy, another issue, and there is a wide range of views about how effective asset purchases are in terms of moving the economy. as we move forward, we will be learning about how effective the policy is and what costs and risks may be associated with it. able do that, we will be to give more exclusive guidance. i agree with you that would be more effective if we could give a numerical guidance. i think the federal reserve has come a long way.
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in 1994, we did not tell people we changed the federal funds rate. now we are telling you what the state of the economy would be when we raise it. we are making progress. >> there have been a number of policies in the last few months regarding a strengthening, one being an increase and making adjustments to the leverage ratio, requiring banks to hold long term, unsecured debt bank, and also putting a cap on non deposit liabilities. do you agree with the policies and whether or not the fed should be pursuing them, and in the context of this question of too big to fail, do you think these policies will help to convince the market and the public that too big to fail
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this not exist? >> capital is an important element in addressing too big to fail. one of the things that will be proposed, and it is not in effect yet, will be surcharges on the largest banks, the largest financial institutions will have to hold more capital than smaller banks do. costwill increase their funding and will equalize their cost funding with other banks and make them safer so the risk of their failure is limited. i think that is an important step. there are other restrictions in dodd-frank and they apply most strictly to the largest institutions. in terms of the financing, it is true that excessive reliance
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on short-term funding does present some risk. there are different ways to address that. one way is through liquidity regulation. both in our 166 rule and now through 3, we will be putting forward restrictions on the kinds of financing limits on how much liquidity risks firms take. again, i do not think too big to fail is solved. we are doing a number of things i think will help. we need to keep assessing that. we will be able to tell by looking at market indicators, by doing our own stress test and the like. if we do not achieve the goal, we will have to do additional steps. it is not something we can just
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forget about. it will take time. too big to fail was a major part of the source of the crisis. we will not have successfully responded to the crisis if we do not address the problem successfully. >> thank you. looking at the level of credit scores, is that something you would consider to be a successful transmission of monetary policy? especially given how well the banks are capitalized? mortgageghtening of markets, our sense is it has gone too far.
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some tightening is needed. there were people who bought houses prior to the crisis who really could not sustain a mortgage. so terms and conditions have tightened up. we are now seeing much higher credit quality requirements on potential borrowers. we are concerned a variety of factors, such as concerns, uncertainties about regulation, which we are working on, may have tightened up the mortgage credit box more than would be desirable in a long-running and healthy economy. one of the most powerful tools we have is bringing down mortgage rates and stimulating home buying construction. that is an issue we need to take into account.
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one thing is that as the housing industry has strengthened and home prices have gone up, that has brought people into the credit box in the sense that the number of people who are under water is declining as house prices go up. if people have a bigger down payments and equities in their home, they become more creditworthy. to some extent, monetary policy by strengthening the housing market, helping support house prices, is bringing more people into the mortgage market. >> the stock market has been hitting all-time highs. it has recovered all of its losses from the financial crisis. i want to know if i still have time to get in. [laughter] but seriously, how do you feel about that? is it good?
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is it bad? mission accomplished? are you worried about bubbles? 7.7%e still at unemployment. >> that is right. byare not measuring success terms of the stock market. it is in terms of our mandate, and that is what we are trying to achieve. we do monitor the entire financial system, not just the parts we supervise or regulate. it includes the stock rate and other asset markets. we would use a variety of methods. i do not want to be pulled in now to every individual market and assessing it. in the stock market, we do not see at this point anything out of line with historical patterns. you should remember that while
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the dow may be hitting a high, it is a nominal terms. if you adjust for inflation and the growth of the county, we are still some distance from the high. i do not think it is surprising the stock market would rise, given that there has been increased optimism about the economy and the share of income going to profits have been very high. profit increases have been substantial. the relationship between stock prices and earnings is not particularly unusual at this point. >> [indiscernible] >> thank you. i am with "the associated press." fiscal policy has become more restrictive. how much of a drag to you see from the social security tax increase? and the across-the-board spending cuts that went into affect on march 1? is it possible the fed might
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see a need to provide more support to the economy because of that drag? the drag on fiscal? >> our analysis is comparable to and an analysis presented to the congress. they estimate putting together all the fiscal measures, including the sequester and other cuts that federal fiscal restraint in 2013 is cutting 1.5 percentage points off of growth, which is very significant. that is an issue for us. we take it as a given what the fiscal authorities are doing. the economy is weaker and job creation is lower than it would be otherwise. that is one of the reasons our policy has been as progressive as it is.
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that being said, up monetary policy cannot offset a fiscal restraint of that magnitude. bethe final outcome will worse in terms of jobs than would have been the case with last fiscal restraint. i want to emphasize i do believe long-term fiscal stability is extremely important and i urge congress to do what is ever necessary to put us on a sustainable path going forward. in doing so, i think it is a good idea to pay attention to the impact in the near term on what is still not a completely satisfactory recovery. >> mr. chairman, good afternoon. you earlier stressed you want to see improvement in the labor
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market sustained. and that to make that determination, you have to have adequate economic growth. the projections in the revised summary of economic projections, it seems like a dilemma there. they have reduced the projected rate of unemployment. at the same time, lower the growth forecast. how do you square those two and how do you get sustained improvement in the labor market if the economy will slow down? >> if that happens, it is an issue. there has been a disconnect in the short run between unemployment rate changes and growth during this recovery. there have been times where unemployment has fallen relatively quickly, even though growth has been more limited. we will have to monitor developments in the economy and see what happens. you are right we are not
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forecasting extraordinarily strong growth. it is true, as you noted, projections for unemployment in the fourth quarter are noticeably lower than they were in september when we first announced this asset purchase program. there has been improvement in the outlook as measured by that metric. you are right, if we do need to see a sustained improvement. one month does not cut it. normally, you would expect you would need to see reasonable gdp growth to achieve that. we will have to keep providing for the economy and see how things evolve. ahead >> in the stress test the fed recently conducted, there was an adverse scenario. you published results from the
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individual banks under the severely adverse scenario. you did not under the merely adverse scenario, a shock followed by a quick rise. a two-part question, why did the fed not publish those results? even if you cannot share how individual banks performed, what did you learn from the results you saw from that adverse scenario? >> the reason for publishing the severely adverse scenario is that is the ultimate test, whether the banks are sufficiently capitalized. presumably, if they could survive a severely adverse scenario, then one that is less stressful, they would not have
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as much difficulty. in terms of evaluating the health of the banks, the severely adverse scenario is the right one. i do not see a principal reason why we could not provide information. i will find out at some point why it is done that way. the severely adverse scenario is a scaling up of the adverse scenario. there are differences. for example, we have used some of our work to look at interest- rate risks and sensitivity. we have found generally that banks also can sustain a significant increase in long- term interest rates as well. for a number of reasons. higher interest rates have decreased franchise value because it increases their net interest margin over time. again, i think the severely adverse scenario is the one puts them to the test. we are always talking about what information will be useful investors and the press.
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>> you noted most will not see an increase until 2015. the expectation for the long run rate is around 4%, which would be below the peak rate we saw before the session. given the committee's concerns about unconventional policy, is there any feeling on the committee that perhaps recovery is not going fast enough and has there been any discussion for cushion there? >> further accommodation is not impossible but more difficult
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and harder to predict and there are more side effects that are difficult to predict. i am not sure i understand the whole thrust of your question. we have given this guideline for signposts for how the funds rate will revolve over time. there is a lot of research that shows when you are close by telling markets you will keep rates low for a significant time, that is one way to get longer-term rates down and provide more stimulus to the economy. we think this is an effective tool. we could go further. we could lower even further the unemployment rate numbers we hit. we have discussed variants and one member of the committee has suggested that. for right now, we find that the
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thresholds we have put into that rate guidance seem to be sufficient to approximate the optimal control pad of interest rates, that it seems to give a path of unemployment inflation that is about as good as we can get with the policy tools we have. it does not mean we are satisfied. it means we do not have enough firepower to get the economy back to full employment more quickly. i do not know if that was responsive or not. >> concerns about unconditional policy, is there a feeling more should be done so when the next rolls around, you have more room to cut rates, or are you comfortable on an ongoing basis? >> you are talking about the inflation target basis? ok. historically, the argument for having inflation here, we define price stability as 2%
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inflation. one might ask, it should be zero inflation. why do you choose 2% instead of zero? the answer is the question you are raising. you have zero inflation and you are very close to the inflation zone. beinal interest rates would so low it would be difficult to respond to a recession. it has been suggested 2% is an appropriate balance between the cost of inflation and what you are referring to. we put that number in fairly recently. it is still being debated in academic circles. we will see what kind of outcome they come up with. it is an interesting question to quantify. there is research which asks, how often do you tend to hit that? our belief a few years ago is it is rare. i am sure there will be a lot of thinking about this in
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academic circles. >> hello. there is a lot of talk about whether certain institutions are too big to fail. i want to get to another question. the financial sector comprises about 5% of the u.s. economy in 1980. now it is 9%. i am wondering if you think that shift is beneficial? >> i do not think i know the answer. the financial system, i could argue two ways. the u.s. economy grew pretty well between 1945 and 1975 and 1980. the financial system was much simpler and did not have a lot of exotic derivatives and so on. that would be one way to argue maybe all this extra financial activity is not justified. on the other hand, the world is a lot more complicated. the world is a lot more
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international. you have large firms that are connecting resources in different countries. there is a lot more demand for risk sharing and so on. based on that and based on the innovation technology has created in lots of industries, you would expect financial services to be somewhat bigger. i do not know the answer to the question. i think my predecessor's claim that the only contribution to the financial industry is the automatic teller machine might be a little exaggerated. i know some people have that view. again, i do not know the answer. the somewhat bigger financial sector can be justified by the wider range of services and a more --
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>> hi, i am jeremy dodge and. i have a follow-up question on cyprus. i am a central banker. do think it was appropriate or fair to impose a levy on every bank deposit in cyprus, even those insured by the european union? >> i have not been involved in those conversations. i do not necessarily know of the details. i know they are grappling with the difficult problem. i think the issue they face is that there is a big financial hole in the sense there is a fiscal issue and a bank recapitalization issue.
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they're looking for resources where they can find them. i think everybody understands there are certain risks with that, besides the equity issue of taxing lower income people, there is the issue of setting a precedent that might reduce confidence in banks in subsequent periods. that being said, it is a very tough issue. finding the resources to solve the problem, there is probably no easy way to do it. we are going to keep monitoring that. i do not envy them that particular challenge. >> thank you. there has been the trend in the last couple of years where the economy jumped out of the gate in the first part of the year, only to kindness falter. is that something you're worried about this year? might qe stay at the same pace as it is now until we are sure of that?
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>> you're absolutely right. fore has been the tendency a spring slump a few times. one possible explanation for that, besides some freaky things, weather events, is seasonality. because of the severity of the recession in 2007 through 2009, the seasonals got distorted. many statistical experts deny it, but it is possible that that led gdp and job creation to be exaggerated early in the year. our assessment is that at this point we are far enough away from recession that seasonal factors pretty much should be washing out by now.
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if we do see a slump, it would be due to real fundamental causes. we would obviously have to respond to that. we are planning to adjust our tools to respond to changes in the outlook. that can go either direction. >> donald judd, cbs. i was wondering if you could tell me how are run on the banks in cyprus could affect u.s. markets. is it possible for the u.s. to levy a tax on regular deposits here, or why not? >> cyprus is a relatively small economy. as concerned as we would be for the people of cyprus, i do not think they have direct implications for the u.s.
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economy. the only way they would create a problem is if the runs became contagious in some sense, if depositors in other countries lost confidence. at this point, i'm not aware of any evidence that that is the case. the argument europeans are making is that cyprus is a unique situation, a different situation, and it is unusual to have a banking sector as large as they have relative to their economy. in terms of the united states, the fdic was founded in 1934, insured deposits, and they're proud of the fact that nobody has ever lost a dime of insured deposits. during the crisis, the response of the government was to increase the levels of account sizes that were insured. i considered that to be extremely unlikely in the united states. >> don lee at the l.a. times.
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would you be in favor of reducing the flow of stimulus ago we had a month or two of job growth light in february, the unemployment rate dropping, but the long-term unemployed did not change much? and a related question, how much of a pickup you expect to see in the labor force rate?ipation what would we need to see there to show substantial improvement? >> on the first question, as i said, that is a decision for the committee. we will make a judgment about how significant improvement is, how sustained it is. long-term unemployment is one dimension of the unemployment problem. i think probably the best way to get the long-term unemployed back to work is to get an overall strong labor market. we would be looking at the overall key indicators like overall unemployment rate, payrolls, and hiring, and some
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other things that i mentioned. the other part of your question was about labor force participation. labor force participation has been declining on a trend like basis in the united states for a while. that is the result mostly of demographic factors. part of the aging of the population, partly the fact not female participation is longer increasing, in fact, it is decreasing a little bit. it is also the case that the labour force attachment with the people of working age has declined for a number of different reasons. there is a trend underlying this. in addition, there are probably some people who left the labour force because they are discouraged that they cannot find work. thehe economy strengthens,
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labor market strengthens. i would expect to see some of these folks coming back into labour force, for example, number of people out of the labor force but to say there would like a full-time job, that number has been going up, which suggests there are more people thinking about going back into the labour force, going back to work. but i doubt in the near term we will see an increase in labor force participation because, besides the effects of unemployment, we have had a downward trend in the united states, which is not due to the recession, but underlying demographic factors. >> from the national journal. you argued in a 1999 paper that monetary policy was not the right tool for addressing asset bubbles, but in january, you suggested there might be a role
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for it, even not as the first line of defense. has your thinking on the issue evolved, and can you explain why? >> i still believe the following switches that monetary policy is a very blunt instrument. if you are raising interest rates to prop up an asset bubble, even if you are sure you can do that, you might in the same time be throwing the economy into recession, which kind of defeats the purpose of monetary policy. therefore, i think the first line of defense -- we have three lines of defense -- very sophisticated monitoring at a much higher level and a much more comprehensively and we have in the past, and then we have supervision and regulation where we work with other agencies to try to cover all the on covered areas of the financial system, and in addition, we try to use communication and similar tools to affect the way financial markets respond to monetary policy. ofdo have some first lines defense which i think should be used first. that being said, i think that given the problems that we've had, not just the united states, but globally in the last 15-20 years, that we need to let least take into account these issues as we make monetary policy.
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i think most people on the fomc would agree with that. it depends on the circumstances. if the economy is in a weak position and interest rates are low for that purpose, it is difficult to contemplate raising rates a lot because you're concerned about some sector in the financial sphere. on the other hand, if you're in
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an expansion and there is a credit boom, the case in that situation for making policy will get tighter might be better. as i've said many times, i have an open mind. we're learning. all central bankers are learning. i would agree with the point i made in my very first beach in 2002 as a governor at the federal reserve where i argued that the first line of defense ought to be the more targeted tools that we have, including regulatory tools, and to some extent, macro prudential tools, like some emerging markets use. >> thank you, mr. chairman. as intense as i might want to end on the n.c.a.a. picks, in light of what john asked, given
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the unprecedented nature of fed policy and the uncertainty around the equity strategy, how much do feel personally responsible to be at the helm when the decisions are made? how does that affect your future? at the last press conference, you said you had spoken to them -- you said you had not spoken to the president about your future. can you tell us whether or not you had that conversation? >> i have spoken to the president a bit, but i do not have any information for you at this juncture. i do not think that i am the only person in the world who manage the exit. in fact, one of the things i hope to accomplish, and was not entirely successful at, as a governor, or chairman of the federal reserve, was to try to
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de-personalize monetary policy and raise recognition of the fact that this is a distinguished institution. we have a dozen -- dozens of ph.d. economists were trying to understand these issues and implement our policy tools. there is no single person who is essential to that. again, going back to my personal plans, i will certainly let you know. thank you. >> thank you. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2013] >> watch "is makers" with senator tom coburn. at 6:00 p.m. eastern here on c- span.
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>> the most striking difference between what is happening today a 100 years ago is the calmness of the parade. a hundred years ago it was not a parade much as the riots. the police refused to protect the marchers. as they progress down their planned parade route from the crowd got larger and larger. they were unruly. they had been drinking. they started to throw things at the women. they tell them to go home. streak cards continue to into people into the packed crowd. the cards got larger and larger and more aggressive. the women cannot 04 words. the secretary of defense pulled out the calvary to push back the unruly crowds of that the women could continue their peaceful exercise of their first amendment rights. today this is a wonderful
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peaceful assembly and the celebration of how far we have come in 100 years. >> a look at the centennial celebration of the woman suffrage parade that took place on pennsylvania avenue in march 1913. >> now top military officials of u.s. no. and european command testified on capitol hill. they discussed threats from iran and north korea and the civil war in syria. this is 2.5 hours. >> good morning. this